Transcript Ferrell Hirt Ferrell M: Business nd 2 Edition FHF The Dynamics of Business and Economics FHF McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc.

Ferrell Hirt Ferrell
M: Business
nd
2 Edition
FHF
The Dynamics of Business
and
Economics
FHF
McGraw-Hill/Irwin
Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.
What is an Organization?
•Two or more individuals working together
for the purpose of accomplishing goals,
objectives and standards.
FHF
The Nature of Business
1-5
What two types of
Organizations exists?
•
•
Not for Profit (Non-Profit)
For Profit (Business)
FHF
The Nature of Business
1-6
What is a BUSINESS?
• An individual or organization that
works for the goal of making a
PROFIT by providing products or
services to consumers.
FHF
The Nature of Business
1-7
What are
PRODUCTS
and/or
SERVICES?
• Items, goods, or acts of
behavior with tangible and
intangible characteristics that
provide benefits, satisfaction
and/or usefulness to customers.
The Nature of Business
FHF
1-8
Products: Tangible Goods & Services
•
Tangible Products
•
•
•
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Loaf of bread
Television
Automobile
Computer
•
Services
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•
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Dry cleaning
Photo processing
Checkup at doctor’s
Musical concert
FHF
1-9
The Primary Goal of Business
• Earn a PROFIT
• The difference between what it costs to make and
sell a product and what a customer pays for it.
FHF
1-10
Profit Is
[
The difference between
what it costs to make and
sell a product and what a
customer pays for it
]
FHF
1-11
Non-Profit Organizations
• The Rainforest Alliance
• works to protect tropical rainforests and encourage
sustainable business and development practices
• Not all organizations are for-profit businesses
• Nonprofit organizations
• provide goods and services but do not have the
fundamental purpose of earning profits
FHF
1-12
Stakeholders
[
People or organizations who have
a stake in or are affected by the
outcomes (behavior, failures,
successes) of an organization or
business. This includes owners,
investors, employees, customers,
communities, regulators, and
society.
]
FHF
1-13
The People and Activities of Business
FHF
1-14
The Activities (Functions) of Business
•Management
•Marketing
•Finance
•Information Technology
FHF
1-15
The Activities (Functions) of Business
• Management: The process of planning,
organizing, leading and controlling and
organization’s financial, human, information
and physical resources for the purpose of
accomplishing goals, objectives and standards
in an effective and efficient manner.
FHF
1-16
Management
• Two Major Areas of Management
• Operations (Production and
Manufacturing)
• Human Resources
FHF
1-17
Marketing
Marketing: The activities and process involved in
the Marketing Mix (4 P’s), including
Product/Service planning
Pricing
Promoting
Placing (Distribution)
FHF
1-18
Finance
Finance: The activities and process
involved in the;
• Acquisition of capital
• Acquisition and Disbursement
of funds and financial assets
• Financial Record Keeping
FHF
1-19
INFORMATION
TECHNOLOGY
• PROCESSES AND APPLICATIONS
THAT CREATE NEW METHODS TO
SOLVE PROBLEMS, PERFORM TASKS
AND MANAGE COMMUNICATIONS
(INFORMATION)
ii
Why
Why Study
Study Business?
Business?
• Develop skills for career success
• Understand business activities
• Learn the importance of profitability
• Individual businesses
• Local and regional impact
• Global economic impact
FHF
1-22
Business Impact
•
•
•
•
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•
Purchase raw materials
Hire employees
Attract capital
Create products
Fuel the global economy
Contribute to society
FHF
1-23
• Economics
• Distribution of resources for the production of
goods and services within a social system
• Resources
• Natural resources (land, forests, minerals,
water)
• Human resources (labor, mgt, owners, govmt)
• Financial resources (capital, bldgs, eqipment)
FHF
The Economic Foundations of Business
1-24
Factors of Production
[
Natural, human, and
financial resources
used to produce
goods and services
]
FHF
1-25
Economic Systems
The interaction of resources as a society
distributes its resources to produce goods
and services
Central issue of economics
How to fulfill an unlimited demand for
goods and services with a limited supply of
resources
FHF
1-26
Economic Systems
Three Important Questions:
1. What types and quantities of goods/services will
satisfy consumer needs?
2. How will goods/services be produced? By whom?
With what resources?
3. How are goods/services distributed to consumers?
FHF
1-27
Comparison of Communism, Socialism,
and Capitalism
FHF
1-28
Communism
•
A society in which the people without regard to class, own all
the nation’s resources.
• China
• North Korea
• Cuba
FHF
1-29
• System in which the government owns and
operates basic industries but individuals
own most businesses.
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Sweden
Israel
India
FHF
Socialism
1-30
Capitalism
• Free enterprise
• Individuals own and operate majority of
businesses providing goods and services
Australia
Japan
United States
FHF
1-31
Pure Capitalism versus Modified Capitalism
• Pure Capitalism
• Free Market
• All economic decisions made without government
intervention
• Modified Capitalism
• Government intervenes and regulates business to
some extent
FHF
1-32
Mixed Economies
[
No country practices pure
capitalism or pure
socialism/communism.
Economic systems contain
various elements of
government intervention
]
FHF
1-33
Mixed Economies
Help obtain national economic objectives
• China
‣
The Communist government encourages
entrepreneurship and private investment
‣
Foreign companies operate in China
• United States
‣
Capitalist, but the government took majority
ownership in auto companies, banks, and
insurance companies during the 2008-2009
economic crisis
FHF
1-34
Distribution of resources and products is determined by
supply and demand
Demand
• Number of goods/services consumers buy at
given price at a specific time
Supply
• Number of products businesses will sell at
different prices at a specific time
FHF
Supply and Demand
1-35
Forces of Supply & Demand
FHF
Price at which number of products supplied equal amount of
products consumers are willing to buy at a
specific time = equilibrium price
1-36
Nature of Competition
Competition
• Rivalry among businesses for consumers’ dollars
Pure Competition
• Many small businesses in same product market
Monopolistic Competition
• Small number of businesses
• Little difference in products
Oligopoly
• Very few businesses selling a product
FHF
1-37
Economic Cycles & Productivity
Economic Expansion
•
Economy is growing and consumers are spending
money
Economic Contraction
•
Spending declines, layoffs, economy slows down
FHF
1-38
Overall Unemployment Rate
TABLE X
FHF
1-39
Inflation
•
Condition characterized by continuing rise in prices
Recession
•
Decline in production, employment, and income
Depression
•
Unemployment very high; consumer spending low; business
output sharply reduced
Unemployment
•
FHF
% of population that wants to work but unable to find jobs
Economic Cycles
1-40
The 2008-2009 Recession
The worst recession since the Great Depression
•
Collapse of many financial institutions
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AIG
Bear Stearns
Washington Mutual
Merrill Lynch
Stock market dropped 50%
Highest mortgage default rate in history
Unemployment reached 10% by late 2009
Personal savings rates increased
Government spent $750 billion on financial institutions,
and $789 billion on an economic stimulus package
FHF
1-41
Measuring the U.S. Economy: GDP
FHF
1-42
Lowe’s versus Home Depot
• What do you think is Home Depot’s target market?
• What about Lowe’s? Are they different?
FHF
1-43
TABLE X
FHF
Evaluating the U.S. Economy
1-44
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The early economy
The industrial revolution
The manufacturing economy
The marketing economy
The service economy
The Internet-based economy
A Brief History of the U.S. Economy
FHF
1-45
Entrepreneurship
Entrepreneur ~An individual who risks his/her wealth,
time and effort to develop for profit an innovative product
or way of doing something.
Entrepreneurship requires:
•
Risk
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Innovation
Creativity
Reward
FHF
1-46
The Role of Government in the U.S. Economy
Modified Capitalism
• the government regulates industry to encourage
competition and protect stakeholders like
consumers, employees, or the environment
• Laws force businesses to adhere to government
standards
• Government agencies like the U.S. Federal
Reserve Board or the Department of Commerce
occasionally intervene to regulate the economy
FHF
1-47
Ethics & Social Responsibility
• Stakeholders increasingly demand that
businesspeople behave ethically and socially
responsibly
• Business reputation depends on profit and
ethical conduct and social responsibility
FHF
1-48
IceStone
• New York's IceStone takes recycled glass and
concrete to make durable surfaces like
countertops.
•
The company had used Cradle to Cradle
Certification from design firm MBDC for its
process of creating durable surfaces from
recycled glass and concrete. Here's how they
do it.
FHF
Green Small Business
1-49
Can You Learn Business in a Classroom?
Yes!!!
To be successful in business, you need:
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knowledge
skills
experiences and
good judgment
FHF
1-50
FHF
1-51